Dow Jones futures were little changed early Wednesday, along with S&P 500 futures and Nasdaq futures. The stock market rally resumed on Tuesday, with the S&P 500 reclaiming the 4,000 level. A huge Apple iPhone factory in China faced unrest overnight amid Covid restrictions.
Deere (DE) reported earnings early Wednesday, with DE stock in a buy zone. Deere’s earnings and guidance will be important for a variety of agricultural stocks, including CF Industries (CF) and Archer-Daniels-Midland (ADM), as well as machinery such as larvae (CAT).
Energy stocks continue to do well. Leader in solar Enphase Energy (ENPH), coal producer Peabody Energy (BTU), refiner CVR Energy (CVI), natural gas producer EQT Corp. (EQT) and LNG stocks Energy Development (EE) are all near the points of purchase.
EE stock exploded on Wednesday, with Enphase returning to a buy zone. BTU, CVR Energy and EQT stocks are actionable.
ENPH stock is on the IBD Leaderboard. EQT stock is on SwingTrader. Deere stock is in the IBD 50. Peabody Energy is Tuesday’s IBD Stock Of The Day.
Apple iPhone Factory Troubles
Riots reportedly broke out overnight at one of Apple’s largest iPhone factories in China, as hundreds of employees clashed with security. More than 100,000 workers have been forced to stay at the Foxconn campus in Zhengzhou for weeks due to Covid concerns, with many reportedly not being paid on time.
It comes amid renewed lockdowns and severe restrictions across much of China as Covid cases rise.
Apple recently warned that Apple iPhone 14 Pro models are in short supply due to the Foxconn factory in Zhengzhou.
Apple stock rose 1.5% to 150.18 on Tuesday, finding support near its 50-day line but below its 200-day moving average.
Dow Jones Futures Today
Dow Jones futures are flat against fair value. S&P 500 futures were little changed. Nasdaq 100 futures fell 0.15%.
Crude oil futures were little changed. The price of natural gas increased by 4%.
New Zealand’s central bank raised rates by a record 75 basis points, as expected.
The minutes fed from the November meeting will be released on Wednesday.
Remember that overnight action in the Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
Join IBD’s experts as they analyze stock market rally action on IBD Live
Stock Market Rally
The stock market rally opened mixed on Tuesday but gained steam for broad-based gains, closing near session highs.
The Dow Jones Industrial Average rose 1.2% in stock market trading on Tuesday. The S&P 500 index and Nasdaq composite both jumped nearly 1.4%. The small-cap Russell 2000 popped 1.1%.
The 10-year Treasury yield fell 7 basis points to 3.76%. But the two-year Treasury yield, which is more closely tied to Fed policy, was almost flat at 4.53%.
The dollar, after rallying in the previous three sessions, fell back on Wednesday. The greenback has fallen sharply since late September, especially since early November.
US crude oil prices rose 1.1% to $80.95 a barrel, continuing to rebound from Monday’s brief dive. Gasoline futures jumped 4.3%, good news for refiners. Natural gas futures edged higher after falling more than 2% intraday.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) jumped 3.4%, helped by more energy and metals stocks. The iShares Expanded Tech-Software Sector ETF (IGV) rose 1.8%. VanEck Vectors Semiconductor ETF (SMH) popped 2.9%.
The SPDR S&P Metals & Mining ETF (XME) gained 3.2%, and the Global X US Infrastructure Development ETF (PAVE) tacked on 1.3%. The SPDR S&P Homebuilders ETF (XHB) returned 1.9%. The Energy Select SPDR ETF (XLE) rose 3.1%. The Health Care Select Sector SPDR Fund (XLV) rose 0.9% to a seven-month high.
Featuring stocks with more speculative stories, ARK Innovation (ARKK) gained a 0.3% gain and ARK Genomics (ARKG) fell 0.4%.
Five Best Chinese Stocks To Watch Right Now
Energy Stocks Near Buy Points
Enphase stock rose 4% to 320.44, closing above the 316.97 cup-with-handle buy point for the first time. However, the last three times that ENPH stock has risen above these areas, it has returned lower. Enphase stock tends to have a lot of changes every day. So investors can look to see if ENPH stock has returned to its fast-rising 21-day moving average.
Other LNG stocks showed strength, with Flex LNG (FLNG) which breaks up and Cheniere Energy (LNG) retook its 50-day line.
BTU stock jumped 6.7% to 29.62, just below the 30.15 holding buy point in the seven-month consolidation. Tuesday’s move broke the handle’s trendline, offering an early entry. However, BTU stock is 9.3% above its 21-day line and 17% above its 50-day. The holding was formed after Peabody Energy’s strong earnings.
CVR Energy stock rose 4.85% to 40.85, back above an old 39.81 buy point that may still look valid. Also, CVI stock has a three-week tight pattern with a 42.31 entry. A rise above 41.31 could provide an early entry into that tight pattern.
EQT stock jumped nearly 6% to 43.79, returning above the 50-day line after rebounding from the 200-day on Monday. The shares broke a downward sloping trendline. The official buy point is 52.07.
EE stock rose 9.6% to 30, clearing a 28.49 cup-with-handle buy point on above-average volume, according to MarketSmith analysis. That move to a record close obliterated many of the trades that took place back in Excelerate Energy’s April IPO. EE stock flashed early entries on Friday and Monday, though trading was below normal on those days. Excelerate is now slightly extended from the buy zone and well extended from the 21-day line.
Market Rally Analysis
The stock market rally continues to show profitable action, trading in a narrow range after a modest pullback and support last week. On Tuesday, the major indexes bounced back from Monday’s losses.
The S&P 500 bounced back from its 10-day line, right at the 4,000 level, as it heads toward its 200-day line. While no more than Nov. 15 intraday high, this is the best closing of the index in more than two months.
The 50 day line is only started to lift the S&P 500.
The Russell 2000 is approaching its 200 day mark. The S&P MidCap 400, which held the 200-day line last week, made further gains.
The leading Dow Jones topped the 34,000 level for the first time in three months, just below the August 16 peak. The laggard Nasdaq found support at its 21-day line, above its 50-day, but was unable to recover all of Monday’s losses.
All of these indexes are working on handles, with the Dow sneaking up on top. Most stocks follow the action of the major indexes, so many holds are formed in stocks near buy points. A slight pause, perhaps until key economic reports late next week, will allow moving averages to begin weaving.
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What To Do Now
Until the S&P 500 moves decisively above its 200-day line, investors may not want to add much exposure right now. With the Thanksgiving holiday muting trading and Fed-critical economic data next week, the market rally could be rangebound in the short run.
That helps stocks from different sectors to set the handles and have moving averages to gain ground. Investors should build their watchlists. It’s certainly time to look beyond traditional technology growth stocks, most of which are lagging right now.
Given that many leaders are extended from moving averages, such as Excelerate Energy or BTU stock, it is especially important to look for early entries and act quickly.
Read the Big Picture every day to stay in tune with market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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